Caribbean group suspends fuel import tariff

The decommissioning of an oil refinery in Trinidad and Tobago has prompted regional trade group Caricom to waive duties on refined oil products imported from outside the organization.

The common tariffs of 10pc-20pc on imported products had provided a protected market for the 165,000 b/d Pointe-a-Pierre refinery owned by Trinidad's state-owned oil company Petrotrin.

Petrotrin had been supplying diesel, gasoline, jet fuel and LPG to meet part of the needs of countries in the 15-member trade group that has a population of 16mn. Among Caricom's members are Barbados, Guyana, Haiti, Jamaica and Suriname.

Caricom said it was informed by Trinidad's energy ministry that the refinery would not be able to supply any products to the group's members beyond 30 November.

Caricom's trade and economic council agreed to suspend the common tariff for a year until November 2019.

Neither Caricom nor Trinidad's energy ministry indicated the volumes of products that were being supplied to the group's members by Petrotrin.

"There was some consideration of Trinidad importing products and re-exporting these to Caricom members, but it was decided it would be better to concentrate on importing to meet domestic demand," Trinidad's energy ministry said.

The refinery's shutdown is a consequence of mounting losses and high debts, Petrotrin said in August.

The company had been forced to import increasing volumes of feedstock as domestic crude production has been falling steadily since 2006.

The country has started importing 25,000 b/d of products this month from BP Latin America Integrated Sales and Trading, and which will be released to the local market when Petrotrin's inventories are exhausted at the end of November, the ministry said.

"The suspension of the tariff means Trinidad no longer enjoys ‘most favored nation' status for oil products in Caricom," Jamaica's energy ministry tells Argus.

"But this could be to the advantage of those members of the group who could source petroleum products at prices cheaper than they had been paying Petrotrin."

Caricom countries had already been supplementing supplies from Petrotrin by importing some products from other sources, mainly the US and Mexico.

This is the second significant change some Caribbean countries have been forced to make to their trade in oil products. Several had been beneficiaries of Venezuela's PetroCaribe preferential oil supply facility created by in 2005. Under PetroCaribe, Venezuelan state-owned oil company PdV supplied crude and products, allowing the importing countries to keep a part of the payment as a long-term, low-interest loan.

But PdV's declining oil production, its oil-backed loan and debt commitments mainly to China and Russia and more recent international arbitration settlements have effectively dried up all preferential supply, leading importing countries to seek other sources. But PdV continues to supply around 50,000 b/d of free oil to Cuba under a separate state-to-state agreement.